Japanese stocks have rebounded from last week’s sell-off, with investment firm Bernstein seeing hope for the future, recommending specific trading strategies and earmarking stocks for overweight. Japan’s Composite Stock Exchange Index (Topix) plunged 12.23% on August 5, and the benchmark Nikkei 225 index fell 12.4%, which was the worst decline since “Black Monday” in 1987. Both indexes have since recovered some of their losses, with the Topix and Nikkei closing up 2.83% and 3.45% respectively on Tuesday. Referring to past crises, analyst Rupal Agarwal noted that “the market may have bottomed in the near term; recent dovish comments from the Bank of Japan (BOJ) may stem the spread winds.” With the structural story never broken, this sharp correction presents an excellent opportunity for long-term investors to get back into Japan, however, given broader macro and political uncertainty, rising equity risk premiums, and earnings revision trends. moderation, we expect the market to remain volatile,” she added in a research note on August 8. Here are four TSE-listed stocks in the investment bank’s defensive screen. They also trade in the United States as American Depositary Receipts, according to FactSet’s consensus price target. Stock trades at ‘big discounts’ One of the names on the bank’s screen was video game company Nintendo. The company made headlines when revenue and profits fell sharply in the fiscal first quarter as sales of its aging Switch console fell. Nintendo shares fell after the news was announced, but are still up 5.3% year to date. Of the 25 analysts covering the stock, 14 have buy or overweight ratings, eight have hold ratings and three have underweight or sell ratings, according to FactSet data. The average price target for the stock is 7,750 yen ($52.50), with upside potential of about 19%. Other companies appearing on the screen include video game maker Capcom, electronics maker Keyence Corp and entertainment company Bandai Namco Holdings. Analysts on average see upside potential of more than 19% for Capcom, nearly 24% for Keyence and 22.5% for Bandai Namco, according to FactSet. —CNBC’s Michael Bloom, Charmaine Jacob and Arjun Kharpal contributed to this report.
